Buy a condo or wait: concerned about being priced out (Atlanta: for sale, real estate market)

[blisteringherb]

I'm moving to Atlanta, GA in September, and I've been going back and forth for months between buying and renting. I really WANT to buy, which in many ways is purely emotional, but I've run the numbers over and over again with different scenarios and in my case it's either roughly equal or cheaper to buy. Those calculations included PITI, HOA and general maintenance vs similar rental units. I've spent a significant amount of time in Atlanta and done hours of research reading comments here and in other places so I'm pretty confident about the areas in which I want to live.

Here are the parameters:

Income
- $115k/yr

Employment
- Working from home

Family Status
- Single, no kids and none planned for the future

Areas
- Midtown
- O4W
- Inman Park
- Cabbagetown

Home Type
- Condo (1 or 2br)

Price Range
- $200k max

My main question is: should I rent for a year or longer and buy after that period? I know that's most likely the smartest thing to do, but I'm:

1) Concerned about prices on 1 and 2br condos in those areas continuing to rise precipitously and thus costing more money and being even closer to the top

2) I HATE moving and I'll have no furniture so I'll have to deal with that moving stuff twice.

3) Rents keep increasing.

4) It's not much, but I'd be missing out on $3k of equity and around $2k more in my tax return b/c of the mortgage interest and property tax deductions.

Would I be missing an opportunity by waiting to buy? Am I missing anything?

[jsvh]

Condos in Downtown are a great deal still. 1 bedrooms for under $100k and 2 bedrooms under $150k. That is where I would buy if I were in your shoes.

I think most of the areas you have listed you are already close to being priced out. The key is to find the neighborhoods before they are the next big thing. And those areas are already a "big thing". But if you are willing to make sacrifices you can probably still make something work in those neighborhoods.

[No2Monsanto]

You could definitely get a one bedroom condo in those areas; a 2/2 may be pushing it, unless you just luck up on a deal. Single family definitely outta the question, especially in Midtown. Checkout this website; they specialize in in town properties. Your concern about being priced out is valid, because you're just about there now. Good luck. Atlanta Home Search | Metro Atlanta GA Homes for Sale | NEST ATLANTA

[cwkimbro]

I think you know your conundrum.

The only thing I will say is buying the wrong place and then moving after buying another one is an expensive mistake.

[ATL Golfer]

I may be listing a 2/1 in Tribute Lofts around that time and typically have properties in those areas. Keep in touch and perhaps we can swing you a deal if you don't have an agent and want to save 3%.

Tribute Lofts in my opinion is a great buy right now. The building had issues from the original design/construction, however all of those issues are being worked through right now. Everyone was assessed a $5k special assessment. I've paid mine in full. There is a chance part of the assessment will be refunded.

The building is trading particularly low for the area due to these issues. People are having a hard time finding lenders that will do the building which depress values. However, once these issues are fully resolved, expect the prices to increase dramatically. Units are still selling in there with certain lenders, but the building has a bad rap at the moment. I'll be selling mine for 175-185 and really think it will be 200+ in just a couple years, if not sooner if the market stays on its path. Originally sold for $240k and comes with 2 parking spaces. One of which you can rent if you so choose for $60-80.

[Clayton white guy]

I say take the plunge! Look for something with an upside potential (perhaps something downtown as opposed to Midtown to get ahead of "the next wave", but be careful in your evaluation and definitely get an agent who is VERY KNOWLEDGEABLE of current Intown market trends. With research and good luck you may be able to make some great equity in five years or so. That way if your marriage or family status changes (many of us have said, "never" LOL) you can make some money toward a more family friendly place.

[ElleKaye]

Originally Posted by blisteringherb

I'm moving to Atlanta, GA in September, and I've been going back and forth for months between buying and renting. I really WANT to buy, which in many ways is purely emotional, but I've run the numbers over and over again with different scenarios and in my case it's either roughly equal or cheaper to buy. Those calculations included PITI, HOA and general maintenance vs similar rental units. I've spent a significant amount of time in Atlanta and done hours of research reading comments here and in other places so I'm pretty confident about the areas in which I want to live.

Here are the parameters:

Income
- $115k/yr

Employment
- Working from home

Family Status
- Single, no kids and none planned for the future

Areas
- Midtown
- O4W
- Inman Park
- Cabbagetown

Home Type
- Condo (1 or 2br)

Price Range
- $200k max

My main question is: should I rent for a year or longer and buy after that period? I know that's most likely the smartest thing to do, but I'm:

1) Concerned about prices on 1 and 2br condos in those areas continuing to rise precipitously and thus costing more money and being even closer to the top

2) I HATE moving and I'll have no furniture so I'll have to deal with that moving stuff twice.

3) Rents keep increasing.

4) It's not much, but I'd be missing out on $3k of equity and around $2k more in my tax return b/c of the mortgage interest and property tax deductions.

Would I be missing an opportunity by waiting to buy? Am I missing anything?

1) Housing prices (buying or renting) are rising now. It's slightly more prevalent intown, and your desired areas are intown. I have lived here for a bit over a decade and I feel confident that the prices will continue to rise and then drop. There may not be the bubble bursting incentive of so many people getting mortgages they could not really afford, but something will kick it off if only because it's getting a little out of hand.

I bought a house in Kennesaw when I moved here. It was large and I got a lot of house for my money.l I was the only single female at all and further with no children in my neighborhood, and that brought challenges I did not anticipate with blending in with my neighbors. Also, my commute to work was horrific.

I wish had taken a moment to just see where I would like to live here before buying. I think even if you only do a short term lease for like three months or so, rent first. Take a moment to truly evaluate where you'd like to live after actually living here.

2) I do not like moving either, and I'm not sure who does. I also do not quite understand what you're sayihg here. If you have no furniture, it sounds like an easy move as long as you're not doing it yourself. Also, every new space requires something different. I'm not saying a living room set, dining room set, berdroom, and electronics cannot go from one place to the next. I am saying that there always tends to be something you need different for a new space. I've just sometimes had to get rid of some things on Ebay or Craigslist that did not work for the new space and buy something that suited it better. An example would be that I don't fireplaces in my new place in Midtown. I had two in my last. Should I have ketpt the screens and equipment in storage forever or just go ahead and sell and buy again if I need them. It's not like I was getting rid of my grandparent's antique furniture. (Clearly, I have some issues over this lol. It's based on an argument with my mother.)



3) and 4) Don't worry. Have a little patience. They will go back down.

[ATLJR]

Here is my opinion. Multifamily rent growth is projected to continue through 2016. The year after year rent growth, based on Q1 2015, was 7.5%. This is the largest increase since 1995 and while new supply is coming onto the market the units are being delivered at the same historical yearly average (and we had years recently where basically no new product was put onto the market). Atlanta is also seeing some of its highest job growth in decades. Rents are high, they should get higher, they're probably not going to get lower anytime soon.

Buying - I would be most confident to buy a condo in neighborhoods like O4W, Cabbagetown, and Inman Park where it will be difficult to bring new condos to market. I love Midtown, but my worry about Midtown is that there are a lot of condos there already and once condos start coming back to the market, this is where you'll see more of the same - typical high rise condos, with no uniqueness about them. This could affect your value long term.

I think buying now is still fine. Prices are much higher than in the past, but they still haven't caught up to 2005 levels. Looking at charts, at least in town, 2012-2013 seems to be the low point with prices steadily rising. I don't see prices in town going back down anytime soon. Even when new product hits the market there is such a huge demand of people who have been "waiting out the storm" since 2008-2009, that they'll get gobbled up quick.

Edit: To add, I don't think you're missing an opportunity not buying. There's no point in rushing just for the sake of buying, but I did want to point out that rents will continue to increase for the forseeable future and condo prices in the neighborhoods you listed will continue to go up. If you're hoping for rents to go down and/or home prices to go down I think you're out of luck.

[AfternoonCoffee]

Originally Posted by ATLJR

Edit: To add, I don't think you're missing an opportunity not buying. There's no point in rushing just for the sake of buying, but I did want to point out that rents will continue to increase for the forseeable future and condo prices in the neighborhoods you listed will continue to go up. If you're hoping for rents to go down and/or home prices to go down I think you're out of luck.

This is sound advise. IMO, timing the real estate markets is almost as futile as trying to time the stock market. Generally speaking, it's not usually the best strategy for individuals.

I don't know how old you are, OP, but your question takes me straight back to 2005-2007, when everyone felt they had to jump into real estate before prices got too high...many people made less than ideal decisions based on this thinking. Ask me how I know...

I understand, other factors and underlaying market conditions are different now, but as an individual purchasing a primary residence, I think your decisions should be based off of personal factors: downpayment, neighborhood, desired qualities of the home: size, style, etc., and budget any other factors that matter to you about where you live. If you're likely to move in 3 yrs, don't buy. If you're likely to move one day in the future, buy something you'll likely be able to resell. If you're not handy or don't have extra time and money, don't buy a fixer-upper. If you absolutely LOVE a place, and it's within YOUR pre-determined budget, assuming it's not crazy-over priced, buy it. Even if it's not a "deal."

I'm seen too many people squabbling over relatively insignificant details when you're talking about the home you'll live in for 10-15 yrs. On the other hand, I've seen people get so caught up in "buying > renting" that they lose perspective and common sense.

[ATLTJL]

First off, let me just say that I admire your desire to cap your investment at $200k despite your $125k salary. Good for you, we'd be in much better shape if more people were this financially responsible!

I don't have a crystal ball and I can't predict the real estate market better than anybody else can, but I do know this: nobody knows what it's going to do and trying to time it is a fool's game. If you have the money to spend now and you find a property you like, buy it.

One thing I do know is that interest rates will not get lower than they are today and my big concern is that if you wait a year, prices may be the same, lower, or whatever, but you'll end up with a higher interest rate and being able to afford to spend less than you can today.